Bank of England governor Mark Carney has come out swinging against critics of his forward guidance policies as rate market futures increasingly price in a normal cyclical recovery in the cost of sterling.
Carney, who has made increased communication a centrepiece of his governorship since arriving at the bank last summer, was speaking in front of the House of Lords economics committee.
‘A return to growth is not the same as a return to normality,’ he said, defending his commitment to keep rates at their historical low of 0.5% until unemployment falls below 7%.
The Bank of England currently estimates that will happen in 2016, while the Office of Budgetary Responsibility puts the date ay 2017.
Futures markets are forecasting substantially tighter monetary policy within the next year. Carney was speaking as official data showed inflation falling to 2.1% in November from 2.2% the month before, the lowest since 2009, offering him some additional leeway.